Prescription drugs can be very cost-effective treatments for chronic illness;they forestall complications, reduce attendant medical utilization, and make patients more productive. But with recent increases in pharmacy spending, benefit managers have increased co- payments and adopted policies designed to reduce pharmaceutical use. While increased patient cost-sharing may moderate overall drug spending, it can adversely affect population health, in some cases, can actually increase total health plan spending. The proposed study will extend our earlier work on prescription drug cost sharing by examining both patient and provider behavior across a diverse set of diseases and drug classes. First, we will isolate the effects of pharmacy benefit design on initiation, compliance, and discontinuation of therapy. This work will examine use of traditional pharmaceuticals, as well as expensive biologics and other specialty drugs used to treat complex clinical conditions such as cancer and kidney disease. Second, we will examine the link between better adherence to drug therapy and subsequent use of other medical services and changes in clinical outcomes such as LDL levels for patients with elevated cholesterol of HbA1C for patients with diabetes. We also will explore how cycling into and out of coverage due to annual spending limits or gaps in coverage under the standard Medicare drug benefit (Part D) affects use of pharmacy and non-pharmacy services among the elderly. Finally, we will examine physician prescribing behavior and how it changes with plan benefit design. The data for this study cover a period of rapid transition in benefit design and have already proven quite valuable for understanding board trends in cost-sharing and its association with prescription drug use. They include over 8.7 million person-years of information from 145 health plans from 1997 to 2004, linking health care claims to plan benefit design. These claims data will be supplemented with data from other sources, including laboratory data, to provide a complete picture of how pharmacy benefit changes affect treatment and outcomes in the United States. PUBLIC HEALTH RELEVANCE: There is great controversy over the optimal design of pharmacy benefits. Using a large claims data set, we will investigate how pharmacy cost sharing affects use and health for patients with a diverse set of diseases and drug classes, and assess how these findings differ for elderly patients.